Q. Do I deduct my Zakaat from each pay check, or do I pay of my yearly total income?
A. One need not deduct their Zakaat from each pay check, nor from the total income. The criteria for paying zakaat are simple:
The eligible person must merely observe if they possessed the nisab amount on zakaatable monies/goods at the start and end of each Islamic year. If they did possessed the nisab amount at the start and end of the Islamic year, then such persons must view themselves eligible for paying zakat for the entire year. If they lost their wealth within the cause of this year and did not posses nisab during the cause of the given year, then from the point they had gotten the new nisab amount which makes them eligible, they must do their calulation for zakaat.
Example: (based on a query that was sent to us) In an Islamic year, (1st of Ramadaan to the 1st of ramadaan of the following year,) Maymoona earned $100 000. At he end of the Islamic year, she only had $7 000 left. She would only have to pay 2.5% (zakaat) on the $7 000. Her total amount of zakaat payment to the poor (or those that qualify for zakaat) would be $175. Had she decided to calculate her zakaatable income based on her yearly salary, she would be paying $2 500 instead of $175. This would be incorrect. For zakaat is not a tax, it is charity linked to worship. The One worshiped would not do injustice to the worshiper.
Example, Maymoona did not have any money on the 1st of Ramaadan. It is only from muharam 1st that she began to earn a salary. In such a case, she must calculate her zakaat from Muharam 1st. After the passing of one year upon her first earning, whatever zakaatable possessions she has would be eligible as payment for zakaat. The key criterion is that the set money received only becomes eligible for zakaat after one year, (should it not be used up.) Whatever remaining money exists upon passing of a year becomes eligible for zakaat! (Provided the owner has ownership of finances above the amount of nisab as well)
Example: Zaid had in his possession $5 000 on the 1st of muharam. The following year on muharam 1st he had in his possession zakatable assets of $3 000. He would pay only 2.5% (zakaat) on the $3 000.
Allah Certainly Knows Best.